Car Buying in America

By Gary S. Vasilash

In 2019 some 148,000 went to a facility in Wolfsburg, Germany. Not surprisingly, COVID 19 reduced the numbers (97,570 in 2020).

The reason those people went to Autostadt was to pick up their new Volkswagen.

And while there they could visit a museum, walk through vehicle pavilions, eat everything from light fair to fine dining, and even stay at a Ritz-Carlton. They could even attend concerts.

Autostadt is the world’s largest auto delivery center.

Volkswagen has turned getting a vehicle into an amazing experience.

People don’t have to pick up their VWs at the Autostadt. It is a choice.

(While I’ve never personally picked up a car at Autostadt, I’ve been there on more than one visit to Wolfsburg and it is remarkable.)

There is nothing like it in the United States.

One of the towers at Autostadt where vehicles are located before delivery. (Photo: Landmann, Lars)

There are factory-owned dealerships in Germany. Meaning, for example, VW-owned.

There are no factory-owned dealerships in the U.S.

Why? Why isn’t there a Ford Factory Store in Dearborn where you could go pick up an F-150 that has been built for you, a facility that is affiliated with the Henry Ford so that there would be the opportunity to have a complete experience beyond the vehicle delivery alone?

Simply because of dealer franchise laws in all 50 states.

Did you ever wonder why you can’t but a vehicle from Amazon?

The same reason. The franchise laws.

What’s the rationale?

According to the National Auto Dealers Association:

“automobiles are sold through franchised dealers because that business model is a good deal for everyone. Consumers are given extra protection in the marketplace, local communities benefit when local businesses compete to sell and service great products, and manufacturers get to invest their capital into designing, engineering and marketing great products in lieu of low-margin retailing. For these and other reasons, state legislatures have passed laws that promote the buying, selling and servicing of cars through local franchised dealers.”

Tim Jackson, the president and CEO of the Colorado Automobile Dealers Association, simplifies that as “Win, win, win.” A win for the OEM. A win for the consumer. A win for the community.

And, as anyone who has bought a vehicle within the past several months from a dealer knows, a win for the dealership, as they have racked up record profits.

On this edition of “Autoline After Hours” Jackson explains why dealers are a good deal for consumers to “Autoline’s” John McElroy, Alexa St. John of Business Insider, and me.

Although there are surveys indicating that people do want to purchase on line and to get vehicles delivered where and when they want them rather than having to go through a dealership, Jackson, not surprisingly, argues that dealerships will continue to play a role in the transaction.

Of course, perhaps trying to emulate Tesla, which doesn’t have franchise dealers, it seems that more and more startup companies (e.g., Lucid, Rivian) are foregoing the franchise model.

Here’s a thought: Aren’t all traditional OEMs doing their damnedest to compete with Tesla on product?

Might they not rethink their model of getting products to consumers?

Well, there are all of those laws that makes that difficult to achieve, to say the least.

But I’m willing to bet that the Germans who have had the Autostadt experience think far more of VW than anyone who has picked up a car from their local dealer, cappuccino machine notwithstanding.

You can see the show here.

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